Fraser of Allander – 31st Oil and Gas survey published


Rising number of oil and gas firms engaged in energy transition

Almost 40% of North Sea operators and contractors are concerned about diversification and energy transition with around half (49%) working to reduce their carbon footprints or develop low carbon solutions, according to the latest Oil and Gas survey (November 27).

The findings of the survey, conducted by Aberdeen & Grampian Chamber of Commerce in partnership with the Fraser of Allander Institute and KPMG UK, reveal that more than half (52%) of respondents report an increasing demand for their products and services in non-oil and gas projects, with a further 25% actively pursuing work outwith oil and gas, and only 11% planning no further diversification.

A growing number of businesses are seeing opportunities in less traditional activities such as decommissioning and renewables. A total of 86% of firms expressed some likelihood of engaging in decommissioning activity in the medium term, the highest result since the question was introduced in 2010. The survey also shows the highest proportion of contractors since 2016 indicating expected involvement with renewables work in the near future, showcasing the changing nature of opportunities across the supply chain.

However, while recruitment continues to rise with 54% of contractors having increased their total workforce in the last year (compared to 40% in 2018), 44% of firms are finding it difficult to attract staff to the North-East, with a quarter claiming recruitment challenges were the result of difficulty recruiting for non-traditional roles.

Of those firms who have considered potential diversification, 34% flagged concerns around profitability and return on investment as the main barrier, closely followed by 31% of firms citing experience and skills within the organisation as a barrier.

When asked to consider the top concerns for the next ten years, oil price and market stability remains the biggest concern for 88% of businesses. The political environment is also perceived to be a threat for a significant proportion of firms with 50% specifying Brexit and a further 22% identifying new regulations and/or tax legislation as an issue.

When it comes to operations within the UKCS itself, the survey shows contractor confidence continues to grow, remaining significantly above the long-term average, illustrating that firms continue to exhibit resilience in the face of ongoing uncertainty in the wider national economy. The recovery in the value of production-related activity in the basin is also continuing, with a net balance of 43% of contractors reporting increased value of activity and more than half expecting the value of work to continue to increase.

Download the 31st Oil and Gas survey here

Published: 27 November 2019

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